Chicago Mercantile Exchange

In this paper we will discuss about the Chicago Mercantile Exchange (CME) of America. As the name suggests, it is based in Chicago and had been formed in 1898. Earlier it was known as Chicago Butter and Egg Board. The CME trades in two ways: the open outcry method and the Globex electronic trading system.
The Chicago Mercantile Exchange (CME) is a financial exchange and situated in Chicago, United States of America. It had been established in 1898 and formerly known as the Chicago Butter and Egg Board.
The CME was not formed to make profit initially. In 2007, it acquired the Chicago Board of Trade and formed the CME Group Inc. The deal worthed almost 8 billion dollars. However, the CME went public in 2002.
Currently CME plans to acquire the New York Mercantile Exchange. The cost of acquisition will be almost $11 billion.
The CME deals with different types of financial instruments namely, currencies, interest rates, commodities and equities. In addition to that, it facilitates trading in several alternative investments for example, real estate derivatives.
The Chicago Mercantile Exchange is the largest future exchange in the world for options and future contracts.
The CME trades in two ways, one is the open outcry system, that comprises the floor traders, and the other is Globex electronic trading system, which came into the picture in 1992.
In the open outcry method, the traders, or floor traders, call out the commodity prices and orders. They stand on a trading pit while calling.
On the other hand, the Globex electronic trading platform is Chicago Mercantile Exchange’s central trading machine. It was the first electronic trading platform in the world used for future trading. As the name suggests, this trading system is fully electronic and it facilitates traders to run their operation from their home. Moreover, the market participants can also trade from the telephone booths at the exchange through the Globex electronic trading platform.

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Last Updated on : 27th June 2013

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